Key Takeaways
- Tesla shares fell 5.6% on Wednesday, ending the stock’s five-day rally from a prolonged slump.
- The stock had gained more than 27% in the week leading up to Wednesday’s session, boosted by the potential for watered-down tariffs and several endorsements.
- William Blair analysts on Wednesday slashed their full-year vehicle sales forecast but maintained an outperform rating on the stock, citing opportunities outside Tesla’s core EV business and the likelihood dip-buyers lend the stock upward momentum.
Tesla (TSLA) shares fell 5.6% on Wednesday, ending the EV maker’s rebound from a prolonged slump.
Tesla shares rose more than 27% in the five sessions leading up to today’s. The climb marked their best stretch of that length since investors bid up the stock in the wake of Trump’s November election victory.
Before beginning to rally last week, Tesla’s shares were down more than 50% from their all-time highs set in December, with much of that decline coming throughout February and early March. Tesla’s sales in key markets, like Europe, have slumped this year despite rising demand for electric vehicles. Tesla cars and dealerships have been targeted by vandals upset with CEO Elon Musk’s political influence. And ardent bulls have publicly worried that Musk is stretched too thin by his corporate and government work.
But the price of Tesla’s stock at times appears to have little connection to the health of its EV business, a disconnect that was apparent Wednesday when William Blair analysts cut their full-year vehicle sales estimate by more than 10% while maintaining their outperform rating on the stock.
“Despite the correction in the auto business near term, we remain positive on the faster-than-expected ramp of the Megapack business and ride-sharing rolling out this year,” the analysts wrote. (Megapack is Tesla’s industrial-scale energy storage product.)
Trading Tesla stock, the analysts said, has often “been a function of momentum.” For that reason, they argue the stock’s significant pullback is a reason for optimism in and of itself. “We believe expectations are near a bottom, and as they reset, shares will bottom and momentum will rebound,” the analysts wrote.
What’s Saved Tesla’s Stock From Free Fall?
Musk and his allies have undertaken a damage control campaign this month. President Trump two weeks ago told his followers on Truth Social that he would buy a Tesla as a show of support for Musk. He subsequently held a press conference on the White House South Lawn where he inspected five Tesla vehicles and praised Musk.
Last Wednesday, Commerce Secretary Howard Lutnick urged Americans to buy Tesla stock during a TV appearance.
“It’s unbelievable that this guy’s stock is this cheap. It’ll never be this cheap again,” Lutnick told Fox News. The following day, Musk urged employees to hold onto their stock during an all-hands meeting.
Tesla’s latest winning streak began last Wednesday after the Federal Reserve updated its economic outlook, in which officials forecast cutting interest rates twice this year. And stocks got a boost early this week from reports that the Trump administration is considering limiting the tariffs it plans to roll out on April 2.
Retail investors have been eager to buy the dip, reportedly piling into Tesla stock at a record pace during its recent slump.
Update—March 26, 2025: This story has been updated to reflect the market close.